Chapter 8 - OTHER ISSUE REQUIREMENTS - SEBI (Disclosure and Investor Protection Guidelines) 2000

CHAPTER VIII OTHER ISSUE REQUIREMENTS 8.0 The Lead Merchant Banker shall ensure compliance with the following: 8.1 1 (Omitted) 8.2 2 (Public issue and listing of Convertible Debt Instruments) 8.2.1 3 (Deleted) 8.2.2 4 (Deleted) 8.2.3 An unlisted company making a public issue of 5 (Convertible Debt Instruments) may, subject to other applicable provisions of these guidelines make a public issue and make an application for listing on the stock exchanges without making a prior public issue of its equity and listing thereof, if the following conditions are fulfilled: a) 6 (a credit rating is obtained from atleast one credit rating agency registered with the Board.) 7 (b) A contribution of at least 20% of the project cost, i.e., objects proposed to be, inter alia, financed through the issue, shall be brought in the form of equity. Such equity participation may be brought by the promoter from his own funds or from other sources, subject to the condition that at least 20% of the issue size is brought by way of equity by the promoter from his own funds. If the project is to be implemented in stages, the promoters contribution as per these requirements shall be with respect to total equity participation till the respective stage vis- vis the debt raised or proposed to be raised through the issue.) 8 (c) The issuer company shall agree to comply with the requirements of continuing disclosures as specified under the listing agreement to be entered into with concerned stock exchanges as is applicable for listing of equity shares.) 9 (d) The issuer company shall agree to obtain prior consent of the holders of the Convertible Debt Instruments, through special resolution to be passed at the general meeting of the Convertible Debt Instrument holders, for change in terms of issue, change in capital structure and change in shareholding pattern.) 10 (e) There shall be no partly paid up shares/ other securities at the time of filing of draft offer document with the Board and also at time of filing Red Herring Prospectus and Prospectus with ROC. Provided that in case of a public issue of securities by a listed company satisfying all the requirements specified in clause 2.1.2A, there shall be no partly paid up shares/ other securities at the time of filing Red Herring Prospectus and Prospectus with ROC.) 11 (f)) An issuer company making an initial public offer of 12 (Convertible Debt Instrument) may come out with a subsequent public issue of equity/ security convertible into equity after allotment during the currency of the 13 (Convertible Debt Instrument) only after complying with the guidelines applicable for an initial public offering of such securities. Provided that the provisions of Clause 2.6 shall not be applicable for an Initial Public Offer of such securities if the floor price for conversion of 14 (Convertible Debt Instrument) is determined and disclosed in the offer document for issue of 15 (Convertible Debt Instrument). 16 (g)) The equity held by the promoters and others may be listed along with the listing of equity in initial public offering of equity/security convertible into equity after allotment or at the time of listing if equity arising on conversion of the 17 (Convertible Debt Instrument). 18 (h)) If the equity shares held by the promoters is proposed to be listed on conversion of 19 (Convertible Debt Instrument), it shall be ensured that the number of equity shares allotted to the public (after excluding the allotment of equity shares to holders of 20 (Convertible Debt Instrument) issued on firm allotment/reservation basis) as a percentage of the total paid up equity capital after conversion and listing of the promoters equity, is not less than the percentage specified in clause (b) of sub-rule (2) of Rule 19 of Securities Contracts (Regulations) Rules, 1957. 8.2.4 The lead merchant banker can mention a price band of 20% (cap in the coupon rate/ price band should not be more than 20% of the floor coupon rate/price) in the offer document filed with the Board and the specific coupon rate/price can be determined by an issuer in consultation with the lead manager at a later date before filing of the offer document with the RoC/s. 8.2.5 The issuer may subject to the provisions of Chapter XI of these guidelines, make the issue through book building process to ascertain and determine the coupon rate and price/ conversion price of the 21 (Convertible Debt Instrument)).) 8.2.2.1 22 (Deleted) 8.3 Rule 19(2)(b) of SC (R) Rules, 1957 8.3.1 23 (In case of a public issue by an unlisted company, the net offer to public shall be at least 10% or 25% as the case may be, of the postissue capital.) 8.3.2 24 (In case of a public issue by a listed company, the net offer to public shall be at least 10% or 25%, as the case may be, of the issue size.) 8.3.3 25 (Clauses 8.3.1 and 8.3.2 shall not apply to - a) an infrastructure company, satisfying the requirements specified in subclause (iii) of clause 2.4.1, inviting subscription from public; and b) a government company, statutory authority or corporation or any special purpose vehicle set up by any of them, which is engaged in infrastructure sector. Explanation: For the purpose of sub-clause (b) above, the term Infrastructure sector shall have the same meaning as assigned to it in Explanation to proviso to sub-clause (i) of clause 3.7.1.) 26 (8.3.4) The issuer company is free to make reservations and/or firm allotments to various categories of persons mentioned hereafter for the remaining of the issue size subject to other relevant provisions of these guidelines. Explanation: 1. The expression reservation shall mean reservation on Competitive Basis wherein allotment of shares is made in proportion to the shares applied for by the concerned reserved categories. 2. Reservation on competitive basis can be made in a public issue to the following categories: Sr. No. Category of Persons (i) 27 (Employees of the company) (ii) Shareholders of the promoting companies in the case of a new company and shareholders of group companiesin the case of an existing company (iii) Indian Mutual Funds (iv) Foreign Institutional Investors (including non resident Indians and overseas corporate bodies) (v) Indian and Multilateral development Institutions (vi) Scheduled Banks 28 (2A. In a public issue (not being a composite issue) by a listed company, the reservation on competitive basis can be made for 29 (retail individual shareholders). Provided that the allotment to such shareholders shall be on proportionate basis as in case of allotment in public category.) 3. Specified Categories for Firm allotment in public issues can be made to the following : Sr. No. Category of Persons (i) Indian and Multilateral Development Financial Institutions (ii) Indian Mutual Funds (iii) Foreign Institutional Investors (including non resident Indians and overseas corporate bodies) (iv) Permanent / regular employees of the issuer company (v) Scheduled Banks 4. The Lead Merchant Banker(s) can be included in the category of persons entitled to firm allotments subject, to an aggregate maximum ceiling of 5% of the proposed issue of securities. 5. The aggregate of reservations and firm allotments for employees in an issue, shall not exceed 10% of the total proposed issue amount. 6. For shareholders, the reservation, shall not exceed 10% of the total proposed issue amount. 7. In case of promoting companies are Designated Financial Institutions/ State and central financial Institutions, the employees and the shareholders of such promoting companies, shall not be eligible for the said reservations. 8. The allotment of securities to the specified categories for firm allotment/ reservation shall be subject to such conditions as may be specified by the Government and regulatory authorities. 30 (8.3.5 Application to the Board for Relaxation from applicability of Clause (b) to sub-rule (2) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 31 (Deleted): 32 (8.3.5.1 (Application by an unlisted company for listing of equity shares pursuant to scheme sanctioned by a High Court) 33 (8.3.5.1.1) An unlisted company may make an application to the Board for relaxation from applicability of clause (b) to sub-rule (2) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 for listing of its shares without making an initial public offer if it satisfies the following conditions: i. Shares have been allotted by the unlisted company (transferee company) to the holders of securities of a listed company (transferor company) pursuant to a scheme of reconstruction or amalgamation under the provision of the Companies Act, 1956 and such scheme has been sanctioned by the High Court/s of the Judicature. ii. The listing of the shares of the unlisted transferee company is in terms of scheme of arrangement sanctioned by the High Court/s of the Judicature. iii. Atleast 25% of the paid up share capital, post scheme, of the unlisted transferee company seeking listing comprises shares allotted to the public holders of shares in the listed transferor company. iv. The unlisted company has not issued/reissued any shares, not covered under the scheme. v. There are no outstanding warrants/instruments/agreements which gives right to any person to take the shares in the unlisted transferee company at any future date. If there are such instruments in the scheme sanctioned by the Court, the percentage referred to in point (iii) above, shall be computed after giving effect to the consequent increase of capital on account of compulsory conversions outstanding as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised. vi. The share certificates have been despatched to the allottees pursuant to the scheme of arrangement or their names have been entered as beneficial owner in the records of the depositaries. vii. That the shares of the transferee company issued in lieu of the lockedin shares of the transferor company are subjected to the lock-in for the remaining period. viii. In addition to the requirements of Clause (vii) above, the following conditions are also to be complied with: a) in case of a hiving off of a division of a listed company (say A ) and its merger with a newly formed company or existing company (say B ) there would not be any additional lock-in, if the paid up share capital of company B is only to the extent of requirement for incorporation purposes. b) in case of merger where the paid-up share capital of the company seeking listing (company B ) is more than the requirement for incorporation; the promoters shares shall be locked in to the extent 20% of the post merger paid-up capital of the unlisted company, for a period of 3 years from the date of listing of the shares of the unlisted company. The balance of the entire pre-merger capital of the unlisted company shall also be locked-in for a period of 3 years from the date of listing of the shares of the unlisted company. 34 (8.3.5.2 Clause 8.3.5.2, as it existed prior to SEBI circular dated February 24, 2009, has been modified and provided as clause 8.3.5.4.) 35 (8.3.5.1.2) The unlisted company shall take steps for listing, simultaneously on all stock exchanges where the shares of the (transferor) listed company are/were listed, within 30 days of the date of the final order of the High Court/s approving the scheme. The formalities for commencing of trading shall be completed within 45 days of the date of final order of the High Court/s. 36 (8.3.5.1.3) Before commencement of trading, the company shall give an advertisement in one English and one Hindi newspaper with nationwide circulation and one regional newspaper with wide circulation at the place where the registered office of the company is situated, giving details as specified in Schedule XXVIII.) 37 (8.3.5.2 Application by a listed company for listing of equity shares with differential rights as to dividend, voting or otherwise. 38 (8.3.5.2.1 A listed company may make an application to the Board for relaxation from applicability of clause (b) to sub-rule (2) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 for listing of its equity shares with differential rights as to dividend, voting or otherwise, without making an initial public offer of such equity shares, if it satisfies the following conditions: i. issue of such equity shares are made to all the existing shareholders as on record date by way of rights or bonus; ii. the issuer is in compliance with the conditions of minimum public shareholding requirement with reference to the equity shares already listed and the equity shares with differential rights proposed to be listed; iii. the issuer undertakes to disclose the shareholding pattern of the equity shares with differential rights separately under clause 35 of the Equity Listing Agreement.) 39 (8.3.5.3 Application by a listed company for listing of warrants offered along with Non Convertible Debentures (NCDs) under Chapter XIII A.) 40 (8.3.5.3.1 A listed company may make an application to the Board for relaxation from applicability of clause (b) to sub-rule (2) of Rule 19 of the Securities Contracts (Regulation) Rules, 1957 for listing of its warrants, if it satisfies the following conditions: i. warrants are issued as combined offering of NCDs and warrants under Chapter XIII A of the SEBI (DIP) Guidelines,2000; ii. the issuer is in compliance with all the provisions of Chapter XIII A, including eligibility of the issuer company, pricing guidelines, etc.; iii. NCDs and warrants shall be traded in the minimum trade lot of 1 lakh.) 41 (8.3.5.4 An application to the Board under clauses 8.3.5.1, 8.3.5.2 and 8.3.5.3 shall be made through the designated stock exchange of the listed company and the designated stock exchange may forward the application along with its recommendations, giving reasons in writing to the Board.) 42 (8.3.5.5 The Board may, while granting relaxation under clauses 8.3.5.1, 8.3.5.2 and 8.3.5.3, stipulate any other conditions as may be deemed necessary in the interest of investors and securities market under the facts and circumstances of the specific case.)) 8.4 Capital Structure 8.4.1 For the purposes of presentation of the capital structure in the specified format, the lead merchant banker shall take into account the following: a) Proposed issue amount = (Promoters contribution in the proposed issue) + (firm allotment) + (offer through the offer document). b) Offer through the offer document shall include net offer to the public and reservations to the permitted reserved categories and shall not include the promoters contribution in the proposed issue and firm allotment. c) Net offer to the public shall mean the offer made to Indian public and does not include reservations/ firm allotments/ promoters contribution. 8.5 Firm Allotments and Reservations a) i) If any firm allotment has been made to any person(s) in the specified categories, no further application for subscription to the public issue from such person(s) [excepting application from employee s category] shall be entertained. ii) where reservation has been made to specified category(ies), person(s) belonging to category(ies) [except employees and shareholders categories] shall not make an application in the ` net public offer category. b) i) An applicant in the net public category cannot make an application for that number of securities exceeding the number of securities offered to the public. ii) In the case of reserved categories, a single applicant in the reserved category can make an application for a number of security which exceeds the reservation. c) i) Any unsubscribed portion in any reserved category may be added to any other reserved category. ii) The unsubscribed portion, if any, after such inter se adjustments amongst the reserved categories shall be added back to the net offer to the public. d) In case of undersubscription in the net offer to the public portion, spillover to the extent of undersubscription shall be permitted from the reserved category to the net public offer portion. e) If any person to whom firm allotment is proposed to be made withdraws partially or fully from the offer made to him after filing of the prospectus with the Registrar of Companies, the extent of shares proposed to be allotted to such person, shall be taken up by the promoters and the subscription amount shall be brought in at least one day prior to the issue opening date. f) The shares so acquired by promoters under sub-clause (e) above shall also be subject to a lock-in for a period of 3 years. g) No buy-back or stand-by or similar arrangements shall be allowed with the persons for whom securities are reserved for allotment on a firm basis. 43 (h) No payment in the nature of discount, commission, allowance or otherwise shall be made by the issuer or promoters, directly or indirectly, to any person who receives securities by way of firm allotment in an issue.) 8.6 Terms of the Issue 44 (8.6.1) Minimum Application Value i) 45 The minimum application value shall be within the range of 5,000 to Rs, 7,000. The issuer company, in consultation with the merchant banker, shall stipulate the minimum application size (in terms of number of shares) falling within the aforesaid range of minimum application value and make upfront disclosures in this regard, in the offer document. Explanation: For the purpose of this clause, the minimum application value shall be with reference to the issue price of the shares and not with reference to the amount payable on application. Illustration: For the purpose of sub clause (i), the following may be taken as illustration: The issue price of shares is 500. Out of the same, 100/- is payable on application and the balance on allotment and calls. In this instance, the application value of 5000-7000 shall be arrived at with reference to the issue price of 500/-. As such, the minimum application size, to be stipulated in the offer document, would range from 10 shares to 14 shares and not 50 shares to 70 shares.) ii) 46 (Applications can be made in multiples of the minimum size /value so stipulated in the offer document by the issuer and merchant banker as at (i) and within the range of 5000-7000, as stipulated at (i).) iii) 47 (Schedule XVIIIA may be referred for illustration on sub clause (ii) above.) 48 (iv) The minimum application moneys to be paid by an applicant along with the application money shall not be less than 25% of the issue price. v) In case of an offer for sale, the entire amount payable on each instrument shall be brought in at the time of application.) 8.6.2 Securities Issued to be Made Fully Paid Up a) If the subscription money is proposed to be received in calls, the calls shall be structured in such a manner that the entire subscription money is called within 12 months from the date of allotment. b) If the investor fails to pay call money within 12 months the subscription money already paid may be forfeited. c) If the issue size is above 500 crores and is subject to monitoring requirement as per Clause 8.17.1 of this Chapter, it shall not be necessary to call the entire subscription money within 12 months. 8.7 Restriction on further Capital Issues 8.7.1 No company shall make any further issue of capital in any manner whether by way of issue of bonus shares, preferential allotment, rights issue or public issue or otherwise, during the period commencing from the submission of offer document to the Board on behalf of the company for public or rights issues, till the securities referred to in the said offer document have been listed or application moneys refunded on account of non-listing or undersubscription, etc. 49 (unless full disclosures regarding the total capital to be raised from such further issues are made in the draft offer document.) 50 (Provided that in case of a fast track issue, no such further issue of capital shall be made during the period between filing of the red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with ROC or the letter of offer with Designated Stock Exchange and listing of the securities offered in the issue and/or refund of application moneys, unless full disclosures regarding the total capital proposed to be so raised are made in the offer document.) 8.7.2 (a) No company shall, pending conversion of Fully Convertible Debentures (FCDs) or Partly Convertible Debentures (PCDs), issue any shares by way of bonus or rights unless similar benefit is extended to the holders of such FCDs or PCDs, through reservation of shares in proportion to such convertible part of FCDs/ PCDs. (b) The share so reserved may be issued at the time of conversion(s) of such debentures on the same terms on which the bonus or rights issue was made. 8.7.3 (a) An issuer company shall not withdraw rights issue after announcement of record date in relation to such issue. (b) In cases where the issuer has withdrawn the rights issue after announcing the record date, the issuer company shall not make an application for listing of any securities of the company for a minimum period of 12 months from the record date. Provided that shares resulting from the conversion of PCDs/ FCDs/ Warrants issued prior to the announcing of the record date in relation to rights issue may be granted listing by the concerned Stock exchange(s). 8.8 Period of Subscription 8.8.1 Public Issues (a) Subscription list for public issues shall be kept open for at least 3 working days and not more than 10 working days. (b) The public issue made by an infrastructure company, satisfying the requirements in Clause 2.4.1 (iii) of Chapter II may be kept open for a maximum period of 21 working days. (c) The period of operation of subscription list of public issue shall be disclosed in the prospectus. 8.8.2 Rights Issues 8.8.2.1 Rights issues shall be kept open for at least 51 (15 days and not more than 30 days). 8.9 Price Band 8.9.1 If in a draft offer document submitted to the Board, a price band as per the provisions of clause 3.5.1 of Chapter III of these Guidelines is mentioned, suitable explanatory notes indicating the financial implications, if the price were to be fixed at different ranges within the price band approved by the company Board / General Body, shall be disclosed in the offer document. 52 (Provided that nothing contained in this clause shall apply to a fast track issue.) 8.10 Retention of Oversubscription 8.10.1 The quantum of issue whether through a rights or a public issue, shall not exceed the amount specified in the prospectus/ letter of offer. Provided that an oversubscription to the extent of 10% of the net offer to public is permissible for the purpose of rounding off to the nearer multiple of 100 while finalising the allotment. 8.11 Underwriting 8.11.1 The issuers have the option to have a public issue underwritten by the underwriter. 8.11.2 In respect of every underwritten issue, the lead merchant banker(s) shall accept a minimum underwriting obligation of 5% of the total underwriting commitment or 25 lacs whichever is less. 8.12 Updation of Offer Document 8.12.1 The Lead Merchant Banker shall ensure that the particulars as per audited statements contained in the offer document are not more than 6 months old from issue opening date. 8.12.2 In respect of a Government company making a public issue, the auditors report in the prospectus shall not be more than six months old as on the date of filing of the prospectus with the Registrar of Companies or the Stock Exchange as the case may be. 8.13 Compliance Officer to be Appointed by Lead Merchant Banker 8.13.1 The merchant bankers shall appoint a senior officer as Compliance Officer to ensure that all Rules, Regulations, Guidelines, Notifications etc. issued by the Board, the Government of India, and other regulatory organizations are complied with. 8.13.2 The Compliance Officer shall co-ordinate with regulatory authorities in various matters and provide necessary guidance as also ensure compliance internally. 8.13.3 The Compliance Officer shall also ensure that observations made/ deficiencies pointed out by the Board do not recur. 8.14 Incentives to Prospective Shareholders 8.14.1 The issuer shall not offer any incentives to the prospective investors by way of medical insurance scheme, lucky draw, prizes, etc. 8.15 New Financial Instruments 8.15.1 The lead manager shall ensure adequate disclosures in the offer document, more particularly relating to the terms and conditions, redemption, security, conversion and any other relevant features of any new financial instruments such as Deep Discount Bonds, Debentures with Warrants, Secured Premium Notes etc. 8.16 Issue of Debentures Bearing Interest Less Than Bank Rate 8.16.1 Whenever FCDs are issued bearing interest at a rate less than the Bank Rate, the offer document shall contain disclosures about the price that would work out to the investor, taking into account the notional interest loss on the investment from the date of allotment of FCDs to the date(s) of conversions). 8.17 Requirement of Monitoring Agency 8.17.1 In case of issues exceeding 500 crores, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by one of the financial institutions. 53 (Provided that nothing contained in this clause shall apply to public issues or rights issues made by banks or public financial institutions or to offers for sale.) 8.17.2 54 ((i) A monitoring report, as per the format specified in Schedule XIX, shall be filed by the monitoring agency with the issuer company, on a half yearly basis, till the proceeds of the issue have been entirely utilized. (ii) The monitoring report together with the management s comments thereon shall be placed by the issuer company before its audit committee without delay.) 8.18 Safety Net or Buy Back Arrangement 8.18.1 Any safety net scheme or buy-back arrangements of the shares proposed in any public issue shall be finalised by issuer company with the lead merchant banker in advance and disclosed in the prospectus. 8.18.2 Such buy back or safety net arrangements shall be made available only to all original resident individual allottees. 8.18.3 Such buy back or safety net facility shall be limited upto a maximum of 1000 shares per allottee and the offer shall be valid at least for a period of 6 months from the last date of despatch of securities. 8.18.4 The financial capacity of the person making available buy back or safety net facility shall be disclosed in the draft prospectus 55 (and/or red herring prospectus and prospectus filed with ROC.) 8.19 Utilisation of funds in case of Rights Issues 8.19.1 56 (The issuer company may utilise the funds collected in the rights issue only after the basis of allotment is finalised.) 8.20 Option to Receive Securities in Dematerialised Form 8.20.1 The Lead merchant Banker shall incorporate a statement in the offer document and in the application form to the effect that the investors have an option to either receive securities in the form of physical certificates or hold them in a dematerialised form. 8.21 Issue Opening Date 8.21.1 57 (An issue shall open within 58 (12 months) from the date of issuance of the observation letter by the Board, if any or within 3 months from the 59 (31st day) from the date of filing of the draft offer document with the Board, if no observation letter is issued.) 60 (Provided that nothing in this clause shall apply to shelf prospectus 61 (Deleted).) 62 (8.21.2 The issuer shall, before filing a red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with ROC or letter of offer with Designated Stock exchange, as the case may be, file with the Board through the lead merchant banker an updated offer document highlighting all changes made in the document.) 63 (8.21.3 Where there are significant changes in the offer document, the updated offer document shall be filed with the Board, atleast one month before the date of filing of the red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with ROC or letter of offer with Designated Stock Exchange, as the case may be, as per the procedure specified by the Board in this regard.) 64 (8.22) Presentation of financials in case of change of denomination In case of change in standard denomination of equity shares, the compliance with the following shall be ensured while making disclosure in the offer document: (i) all the financial data affected by the change in denomination of shares shall be clearly and unambiguously presented in the offer document. (ii) comparison of financial ratios representing value per share and comparison of stock market data in respect of price and volume of securities shall be clearly and unambiguously presented in the offer document. (iii) the capital structure incorporated in the offer document shall be clearly presented giving all the relevant details pertaining to the change in denomination of the shares. ********* 1 Omitted the following clause vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003: Public Offer by Unlisted Companies with Post Issue Capital upto 5 crores 8.1.1 An unlisted company, with a commercial operation of less than two years proposing to issue securities to the public, resulting in post issue capital of 3 crores and not exceeding 5 crores, shall be eligible to apply for listing of securities only on those stock exchange(s) where trading of securities is screen-based. 8.1.2 The issuer company shall appoint market maker(s) on all the stock exchanges where the securities are proposed to be listed. 8.1.3 The appointment of market makers shall be subject to the following :- i. At least one market maker undertakes to make market for a minimum period of 18 months and at least one additional market maker undertakes to make market for a minimum period of 12 months from the date on which the securities are admitted to dealing. ii. Market makers undertake to offer buy and sell quotes for a minimum depth of 3 marketable lots; iii. Market makers undertake to ensure that the bid-ask spread (difference between quotations for sale and purchase) for their quotes shall not at any time exceed 10%: iii. The inventory of the market makers on each of such stock exchanges, as on the date of allotment of securities, shall be at least 5% of the proposed issue of the company. 8.1.4 The unlisted companies whose capital after the proposed issue of securities is less than 3 crores shall be eligible to be listed only on the Over the Counter Exchange of India. 2 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/8 dated August 28, 2008 for the following: Public issue and listing of non-convertible debt securities (hereinafter referred to as NCDS) and Debt Securities convertible into equity after allotment (hereinafter referred to as DSCE Prior to the above, the above clause was substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 3 (2001-2002) dated January 11, 2002 for the following: Listing of pure debt / convertible instruments issued by Unlisted infrastructure companies and Municipal Corporations 8.2.1 An unlisted infrastructure company making a public issue of pure debt instruments / convertible debt instruments and a Municipal Corporation making a public issue of pure debt instruments shall be eligible to apply for listing of these instruments in the stock exchanges subject to the following: i) the debt instruments, irrespective of the maturity, shall carry on rating from a credit rating agency not below investment grade; ii) the debt instruments, irrespective of the maturity, shall be fully secured by creating security in favour of the Debenture Trustees; iii) in the case of issue of pure debt instruments by an infrastructure company, equity issued prior to the public issue of debt can be listed only when a public offer of equity has been made; and in the case of issue of debt instruments by infrastructure companies fully or partly convertible into equity, while the PCD/FCD shall be listed directly, the equity held prior to the public issue of the PCD/FCD shall be listed only at the time when the equity arising on conversion of the PCD/FCD are listed. 3 Omitted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 the following: 8.2.1 An unlisted company making a public issue of NCDS may, subject to other applicable provisions of these guidelines, make a public issue and make an application for listing its NCDS in the Stock Exchange/s without making a prior public issue of equity and listing thereof, if the following conditions are fulfilled: a) 3 (a credit rating is obtained from at least one credit rating agency registered with the Board for the NCDS.) b) 3 (A contribution of atleast 20% of the project cost i.e., objects proposed to be inter alia, financed through the issue, shall be brought in the form of equity. Such equity participation may be brought by the promoter from his own funds or from other sources, subject to the condition that at least 20% of the issue size is brought by way of equity by the promoter from his own funds. In case, the project is to be implemented in stages, the promoters contribution as per these requirements shall be with respect to total equity participation till the respective stage vis a vis the debt raised or proposed to be raised through the issue) c) The issuer company shall agree to comply with the requirements of continuing disclosures as specified under the listing agreement to be entered into with concerned stock exchanges as is applicable for listing of equity shares. d) The issuer company shall agree to obtain prior consent of the holders of the NCDS through special resolution to be passed at the general meeting of the NCDS holders for change in terms of issue, change in capital structure and change in shareholding pattern. e) There shall be no partly paid up shares/other securities at the time of filing of draft offer document with the Board 3 (and also at time of filing red herring prospectus and prospectus with ROC). 3 (Provided that in case of a public issue of securities by a listed company satisfying all the requirements specified in clause 2.1.2A, there shall be no partly paid up shares/other securities at the time of filing red herring prospectus and prospectus with ROC.) f) The issuer company may come out with a public issue of equity/security convertible into equity after allotment during the currency of the NCDS or thereafter, only after complying with the guidelines applicable for an initial public offering of such securities. g) The equity held by the promoters or others at the time of issue of NCDS may be listed only when an initial public offer of equity/securities convertible into equity after allotment is made after complying with the applicable provisions of these Guidelines. Prior to the above omission, in the above clause: (i) Sub-clause (a) was substituted vide SEBI Circular No. SEBI/CFD/DIL/ DIP/29/2007/03/12 dated December 3, 2007 for the following: (a) The NCDS shall carry a credit rating not below investment grade at-least from one Credit Rating Agency registered with the Board. Where the issue size of the NCDS is 100 crores or more, such rating shall be obtained from at least two Credit Rating Agencies. (ii) Sub-clause(b) was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: The promoter s contribution of atleast 20% of the project cost i.e. objects proposed to be inter alia financed through the issue, shall be brought in the form of equity. Where the promoters contribution exceeds 100 crores, the promoters shall bring in 100 crores before the opening of the public issue and the remaining promoters contribution shall be brought in on pro rata basis, before calls on the NCDS are made. The promoters contribution of 20% of equity shall be locked in for a period of 3 years from the date of allotment in the public issue of NCDS. (iii) In sub-clause (e), the words and also at time of filing red herring prospectus and prospectus with ROC were inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. (iv) Proviso to sub-clause (e) was inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 4 Omitted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 the following: 8.2.2 A Municipal Corporation which has no share capital may be subject to the provisions of sub-clauses (a), (b) and (c) of Clause 8.2.1, make a public issue of NCDS and list the same on the stock exchange/s. 5 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the words DSCE . 6 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the following: The provisions of clauses (a) to (e) of clause 8.2.1 shall be mutatis mutandis complied with. 7 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008. 8 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008. 9 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008. 10 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008. 11 Renumbered sub-clause 8.2.3(b) as sub-clause 8.2.3(f) , vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/ 2008/28/08 dated August 28, 2008. 12 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the word DSCE . 13 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the word DSCE . 14 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the word DSCE . 15 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the word DSCE . 16 Renumbered sub-clause 8.2.3(c) as sub-clause 8.2.3(g) , vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/ 2008/28/08 dated August 28, 2008. 17 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the word DSCE . 18 Renumbered sub-clause 8.2.3(d) as sub-clause 8.2.3(h) , vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/ 2008/28/08 dated August 28, 2008. 19 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the words DSCE . 20 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the words DSCE . 21 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the words DSCE . 22 Omitted the following Clause vide SEBI Circular No. RMB (Compendium) Series Circular No. 3 (2001-2002) dated January 11, 2002: In case of change in standard denomination of equity shares, the compliance with the following shall be ensured while making disclosure in the offer document:- (i) all the financial data affected by the change in denomination of shares shall be clearly and unambiguously presented in the offer document. (ii) comparison of financial ratios representing value per share and comparison of stock market data in respect of price and volume of securities shall be clearly and unambiguously presented in the offer document. (iii) the capital structure incorporated in the offer document shall be clearly presented giving all the relevant details pertaining to the change in denomination of the shares. 23 Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001 for the following: In case of a public issue by an unlisted company, the net offer to public shall be at least 25% of the postissue capital. 24 Substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001 for the following: In case of a public issue by a listed company, the net offer to public shall be at least 25% of the issue size . 25 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/ 27/2007/10/7 dated July 10, 2007 for the following: An infrastructure company, satisfying the requirements in Clause 2.4.1 (iii) of Chapter II, inviting subscription from public shall not attract the provisions of Clauses 8.3.1and 8.3.2 above. In the above clause, the words shall not attract the provisions of Clauses 8.3.1and 8.3.2 above were substituted vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001 for the following: may not be required to offer at least 25% of its securities to public for subscription as required under rule 19(2)(b) of SC(R) Rules, 1957 . 26 Omitted the following Clause no. 8.3.4 and renumbered Clause no. 8.3.5 as 8.3.4, vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001: 8.3.4 In case of public issues or offers for sale of equity shares or securities convertible at a later date into equity by unlisted companies 299( in any of the eligible sector) at least 10% of the securities issued by such company may be offered to the public subject to the following:- (i) minimum twenty lacs securities are offered to the public (excluding reservation, firm allotment and promoter s contribution); and (ii) the size of the offer to the public i.e. the offer price multiplied by the number of securities offered to the public at point (i) above, is minimum 50 crores. ( Explanation 1 : For the purpose of the above clause company in the eligible sectors shall mean : i. company deriving 75% or more of their turnover from information technology activities during the two years immediately preceding the date of filing the offer document with the Board ii. company deriving 75% or more of their turnover from media/entertainment activities during the two years immediately preceding the date of filing the offer document with the Board iii. company deriving 75% or more of their turnover from telecommunication activities during the two years immediately preceding the date of filing the offer document with the Board Explanation 2 : For the purposes of Explanation 1 a. Information Technology shall have the same meaning as in clause (iii) of Explanation 2 to Clause 2.2. (b) Media/Entertainment shall comprise: i. production of television programmes ii. production of films - corporate films, feature films, documentary films etc. iii. production of radio programmes iv. production of print publications like books, newspapers, magazines, journals etc. v. entertainment websites offering music, films etc. vi. news websites vii. production of music viii. event management ix. running of television channels x. running of radio stations/channels xi. production of Advertisements (c) Telecommunication shall comprise: i. Internet Service providers ii. Providers of telephony iii. Television/internet cable networks iv. Providers of internet and telephony Gateways v. Producers of communication software vi. Producers of internet networking hardware vii. Providers of Satellite services) In the above clause, the words in any of the eligible sector appearing between into equity by unlisted companies and at least 10% of the securities were substituted for the words information technology sector vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 4, 2000. In the above clause, Explanations 1 and 2 were initially inserted vide SEBI Circular No. DIP (Compendium) Circular No. 3 dated August 4, 2000. 27 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following: Permanent employees (including working directors) of the company and in the case of a new company the permanent employees of the promoting companies. 28 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004. 29 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 for the words the shareholders who, on the record date ( date fixed for the purpose of determining the eligible shareholders) , are holding shares worth up to 50,000/- determined on the basis of closing price as on the previous day . 30 Inserted clauses 8.3.5, 8.3.5.1, 8.3.5.2, 8.3.5.3 and 8.3.5.4 vide SEBI Circular No. RMB (Compendium) Series Circular No. 1 dated July 17, 2001. 31 Omitted the words by an unlisted company , vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 32 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 33 Renumbered clause 8.3.5.1 as clause 8.3.5.1.1 , vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 34 Omitted the following clause vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009: An application to the Board under Clause 8.3.5.1 shall be made through the designated stock exchange of the listed company and the designated stock exchange may recommend the application giving the reason therefore. The above mentioned provision now appears in a modified form in the new clause 8.3.5.4. Prior to the above, clause 8.3.5.2 was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: An application to the Board under Clause 8.3.5.1 shall be made through the regional stock exchange of the listed company and the regional stock exchange may recommend the application giving the reason therefore. 35 Renumbered clause 8.3.5.3 as clause 8.3.5.1.2 , vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 36 Renumbered clause 8.3.5.4 as clause 8.3.5.1.3 , vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 37 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. The earlier clause 8.3.5.2 is omitted vide the said SEBI circular, the details of which are given above. 38 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 39 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. The earlier clause 8.3.5.3 is renumbered as clause 8.3.5.1.2, vide the said SEBI circular, the details of which are given above. 40 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 41 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. The earlier clause 8.3.5.3 is renumbered as clause 8.3.5.1.3, vide the said SEBI circular, the details of which are given above. 42 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 43 Inserted sub-clause, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 44 Renumbered clause 8.6.1.1 as clause 8.6.1 , vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005. 45 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following: In case of public issue at par, the minimum number of shares for which an application is to be made, shall be fixed at 200 shares of face value of 10/- each. 46 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following: Where the public issue is at a premium or comprises security, whether convertible or non-convertible, or the public issue is of more than one security, the minimum application moneys payable in respect of each security by each applicant, shall not be less than 2000/- irrespective of the size of premium subject to applications being for a multiple of tradeable lots; 47 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004 for the following: The successful applicants shall be issued by the issuer company share certificates/ instruments for eligible number of shares in tradeable lots. 48 Omitted the following sub-clauses and sub-clause (v) renumbered as sub-clause (iv) and sub-clause (vii) renumbered as sub-clause (v), vide SEBI Circular No. SEBI/CFD/DIL/DIP/13/2004/28/5 dated May 28, 2004: (iv) The minimum tradeable lot, in case of shares of face value of 10/- each, shall at the option of the issuer/offeror, be fixed on the basis of offer price as given below: Provided that the maximum tradeable lot in any case shall not exceed 100 shares. Offer price per share Minimum Tradeable lot Up to 100 100 Shares 101- 400 50 Shares More than 400 10 Shares (v) The minimum number of instruments for which an application has to be made shall be not less than the tradeable lot. 49 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/19/2006/31/3 dated March 31, 2006. 50 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 51 Substituted vide SEBI circular No. SEBI/CFD/DIL/DIP/32/2008/28/08 dated August 28, 2008 for the words and figures 30 days and not more than 60 days . 52 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 53 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 54 Substituted clause 8.17.2, vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007, for the following: A copy of the monitoring report as per the format specified at Schedule XIX, shall be filed with the Board by the said monitoring agency, on a half yearly basis, till the completion of project, for the purposes of record. 55 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 56 Substituted vide Circular No. SEBI/CFD/DIL/DIP/38/2009/08/20 dated August 20, 2009 for the following:- The issuer company may utilise funds collected against rights issues after satisfying designated stock exchange that minimum 90% subscription has been received. 57 Substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: An issue shall open within 365 days from the date of issuance of the observation letter by the Board, if any or 365 days from the 22nd day from the date of filing of the draft offer document with the Board, if no observation letter is issued. 58 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009 for the words 3 months . Prior to the above, clause 8.21.1 was substituted vide SEBI/CFD/DIL/DIP/Circular No. 11 dated August 14, 2003 for the following: An issue shall open within 365 days from the date of issuance of the observation letter by the Board, if any or 365 days from the 22nd day from the date of filing of the draft offer document with the Board, if no observation letter is issued. 59 Substituted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007 for the words 22nd day. 60 Inserted proviso, vide SEBI Circular No. SEBI/CFD/DIL/DIP/12/2004/8/4 dated April 8, 2004. 61 Omitted the words or fast track issue , vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. These words were earlier inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/28/2007/29/11 dated November 29, 2007. 62 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. The earlier clause 8.21.2 is renumbered as clause 8.3.5.1.3, vide the said SEBI circular, the details of which are given above. 63 Inserted vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009. 64 Renumbered clause 8.21.2 as 8.22 , vide SEBI Circular No. SEBI/CFD/DIL/DIP/34/2009/24/09 dated February 24, 2009.